Technology Disruption and Cost Savings Influence Workplace Strategies of Companies in Asia Pacific

April 11, 20178:12 am724 views

Global economic uncertainty and a focus on cost savings are prompting multinational corporations to proactively adopt workplace strategies, says CBRE’s 2017 Asia Pacific Occupier Survey. According to CBRE, approximately 50% of all multinationals will invest more in their workplace and space efficiency programs, ranking it as their main priority for the coming year.

“Corporations across Asia Pacific are making the realignment of workplace strategy a business priority,” said Phil Rowland, CEO of Global Workplace Solutions, CBRE Asia Pacific.

“They are evaluating the longer-term dynamics of the workforce and thinking more holistically about the role of agile working environments in their business. As a result, corporations are developing workplace strategies and space efficiency initiatives to future-proof work environments, attract and retain personnel, and mitigate disruption.”RSH_3611_Infographics_Eng_170317

The increased focus on space optimisation is poised to accelerate a radical workplace change away from fixed desks to Activity-based Working (ABW). More than half of the survey respondents plan to implement ABW, compared to only 16% who plan to move to fixed desks.

On a domestic level, Chinese corporations are at the early stages of considering workplace strategy, whilst the adoption of flexible working in Japan is already high, accounting for almost half of respondents. Implementation of workplace strategies is accelerating amongst corporations. The survey findings reveal that multinationals are stimulating flexible working by prompting employees to share desks.

By 2020, 66% of respondents would have raised the sharing ratio beyond 1:1—up from the current 30%, which means that the number of desks will be lower than the total number of employees. Additionally, the average space per employee is set to decline with multinationals implementing more aggressive desk sharing plans.

While this does not necessarily involve reducing desk sizes, a higher desk sharing ratio will naturally result in decrease in space per capita. Around 63% multinationals have set a target of reaching a space of under 100 sq. ft. per employee within the next three years, up from 46% currently.

The main drivers of workplace change for multinationals are enhancing collaboration amongst employees, and improving talent retention and attraction. Cost saving remains a key factor (35%) but has diminished in importance compared to last year’s survey (53%).

Companies increasingly realise that direct cost cutting can actually be counterproductive, as it can damage employee morale and negatively impact their corporate image.

See: Freelance Economy and Technology Innovation Will Continue to Transform Workplaces in 2017

Challenges Remain to Future Operations of MNCs

A key finding in this year’s survey is the rise of technology disruption as a major concern for multinationals’ future operations—jumping from 21% in 2016 to 36% in 2017. This is especially for both the financial sector, as well as Technology, Media and Telecommunications (TMT) companies.RSH_3611_Infographics_Eng_170317

“Technology disruption is an agnostic phenomenon. For financial institutions, the rapid emergence of FinTech has made investment in technology a prerequisite. In parallel, the TMT sector and the well-established hardware and telecommunications companies, which have invested heavily in product development, may also find rapid technological change particularly costly and damaging to their business,” said Ada Choi, Senior Director of Research, CBRE Asia Pacific.

“Increased automation and the application of artificial intelligence could also reduce the number of business processing jobs.” On a domestic level, most companies in China, Japan and India regarded cost escalation and talent availability as bigger concerns than technology disruption.

This view reflects that domestic companies’ strategic planning is more oriented around challenges that immediately impact their operations, while multinationals have sufficient resources to identify and prepare for long-term structural changes.

For the second consecutive year, economic uncertainty remains the overall top concern for multinationals. Overseas political activities, and geopolitical instability in Asia are set to impact their decision with regards to offshoring.

However, in spite of rising global economic uncertainty, multinational corporations (MNCs) hold positive intentions for headcount growth in Asia Pacific over the next three years. 53% of respondents indicate they will increase office headcount by 2020.

Among APAC-based companies in particular, more than 80% of Indian respondents plan to increase their headcount within the next three years, reflecting the country’s buoyant economy, steady progress in enacting regulatory reforms, and booming outsourcing and ITeS sectors. With overall robust intentions to expand by multinationals, this reaffirms confidence in Asia Pacific’s long-term growth potential.

“International corporations remain firmly focused on the stronger macroeconomic fundamentals of Asia Pacific, but mindful of disruptive challenges. Despite a backdrop of economic volatility, tightening regulations and the mainstreaming of disruptive technology, Asia Pacific continues to remain a long-term growth engine for both multinational and APAC-based companies,” added Ms Choi.  

Also read: Top 9 Disruptive Technology Trends Reinventing the HR Software Market for 2017

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